Jack Lew: The Empire is in Charge and Will Stay in Charge

US Treasury Secretary Jack Lew spoke to Kai Ryssdal of MarketPlace recently and made clear that the US expects to remain the Big Dog in the economic and financial room. The US will let China and other emerging countries "sit at the table," but only if they play by the rules already put in place by the Big Dog:

So I don’t think that there’s anyone on the horizon to take the place of the United States, either in terms of our economic position or in terms of the dollar as the reserve currency. Clearly, there are different forces at work in the economy today than there were in 1944, when half the world, most of the world, was coming out of a war where it had no manufacturing capacity, it had no hard currency, and we were the place with both manufacturing capacity and hard currency. I think now we’re in a world where population growth and economic growth is taking place in the countries that we’ve called the emerging economies. We’re making sure that they take seats at the table, adhere to the rules that we adhere to when you have a seat at the table, and that as we make decisions in the future, we have a very strong voice in what all the rules of the road in the future are.That’s the way for the United States to maintain its power.

Lew was remarkably clear that the US would use muscle if China got out of line:

 We’ve seen this in the world of currency, where for years there has been a huge focus on was China doing things to gain unfair advantage? They now stand up and say they oppose competitive devaluation, that they will not, they don’t see a need for the depreciation of their currency.  That’s very different from just a few years ago. Does that mean we take our eye away? No. We’re going to watch very carefully. If we don’t see actions consistent with those words we will keep the pressure on them.

-RW